"Ideas" in Development from George Soros: Power and Influence Through Philanthropy?

Munich Personal RePEc Archive "Ideas" in Development from George Soros: Power and Inﬂuence through Philanthropy? Saab, Samer Johns Hopkins University - SAIS November 2005 Online at https://mpra.ub.uni-muenchen.de/1878/ MPRA Paper No. 1878, posted 23 Feb 2007 UTC “Ideas” in Development from George Soros: Power and Influence through Philanthropy? By Samer Y. Saab Johns Hopkins University School of Advanced International Studies Ideas in Development Prof. Gilbert Khadiagala Fall 2005 Table of Contents I. Soros: Philosopher King or Global Manipulator....................................................................3 1. Life and Times ...........................................................................................................3 2. Business Claims to Fame (Infamy)............................................................................3 3. Philanthropy Network................................................................................................4 4. Influences and Building Blocks .................................................................................7 5. Ideas ...........................................................................................................................8 i. On Globalization........................................................................................9 ii. On Capitalism, Market Fundamentalism, and Financial Markets ...........10 iii. On “Open Society” and Democracy........................................................13 6. Keynes and Soros.....................................................................................................15 7. Critique and Criticism..............................................................................................16 II. Philanthropy and Ideas ........................................................................................................19 1. Germination and Diffusion......................................................................................19 2. The Invisible Hand of Truth.....................................................................................22 III. Conclusion.........................................................................................................................23 Abstract This paper mainly examines the economic ideas and models brought forward by the always controversial global financier George Soros. The aim is to first explore whether in fact Soros has developed over time a well-articulated model for development based on a coherent system of beliefs and (economic, social, political, and philosophical) ideas, and second examine the notion that the world's wealthiest (including Soros) wield enough power and influence (through philanthropy and other means) to shape the economic landscape of countries. The latter point poses a more problematic question: if indeed the world's wealthiest wield unlimited powers in shaping the global development landscape, it could then be assumed that the quality of their "ideas" does not matter much. How do the resources they control ultimately facilitate the transformation of their beliefs and practices into valid economic "ideas"? Do wealth, power and influence validate ideas? The flip side to this coin is that time (hopefully) eventually weeds out the bad ideas, and only the good ones prevail and propagate in the world, and that the Soros's of the world do not matter much in the long run. A lot has been said and written about Soros's controversial financial dealings but very few attempted to systematically explore his system of ideas and evaluate their cohesiveness. He is too often dismissed as a philosophe manqué. The paper will briefly review the written works of Soros and his publicly stated positions on some of the more significant issues in development and economics today, and at times offer a light critique (or praise) where due. A parallel with Keynes on some of the issues is also drawn. The paper will also offer insight on the question of whether philanthropy is conducive to the germination (and, most importantly, diffusion) of ideas. 2 I. Soros: Philosopher King or Global Manipulator 1. Life and Times1 George Soros (born August 12, 1930 in Budapest, Hungary as Schwartz György) is a financial speculator, stock investor, philanthropist, and political activist. He is the son of the Esperanto writer Tivadar Soros. Currently, he is the chairman of Soros Fund Management and the Open Society Institute and is also former member of the Board of Directors of the Council on Foreign Relations. He is known around the world for the role he played in Georgia's Rose Revolution. In the United States he is known for donating large sums of money in an attempt to defeat President George W. Bush's bid for re- election. On March 19, 1944, when Nazi Germany took military control over its ally Hungary, and started exterminating over 500,000 Hungarian Jews, Soros was thirteen years old. In the following year, Soros survived the battle of Budapest, as Soviet and Nazi forces fought house-to-house through the city. George's father, Tivadar tells of his ordeal to survive fascist Hungary, and help many people escape it, in his book Maskerado. George first traded currencies during the Hungarian hyperinflation of 1945-46. In 1946 George escaped the Soviet occupation by participating in an Esperanto youth congress in the West. (Soros was taught to speak the language from birth and thus is one of the rare native Esperanto speakers.) Soros emigrated to England in 1947 and graduated from the London School of Economics in 1952. In 1956 he moved to the United States. He has stated that his intent was to earn enough money on Wall Street to support himself as an author and philosopher. His net worth reached an estimated $11 billion. 2. Business Claims to Fame (Infamy) Soros is the founder of Soros Fund Management. In 1970 he co-founded the Quantum Fund with Jim Rogers. It returned more than 4000% during the next ten years, and created the bulk of the Soros fortune. On Black Wednesday (September 16, 1992), Soros became instantly famous when he sold short more than $10bn worth of sterling pounds, profiting from the Bank of England's stubborn reluctance to either raise its interest rates to levels comparable to those of other European Exchange Rate Mechanism countries or to float its currency. Finally, the Bank of England was forced to withdraw the currency out of the European Exchange Rate Mechanism and to devalue the Pound Sterling, and Soros earned an 1 Most background information on George Soros was taken from www.wikipedia.com 3 estimated US$ 1.1 billion in the process. He was dubbed "the man who broke the Bank of England." The Times wrote on Monday October 26, 1992: "Our total position by Black Wednesday had to be worth almost $10 billion. We planned to sell more than that. In fact, when Norman Lamont said just before the devaluation that he would borrow nearly $15 billion to defend sterling, we were amused because that was about how much we wanted to sell." In 1997, under similar circumstances during the Asian financial crisis, then Malaysian Prime Minister Mahathir bin Mohamad accused Soros of bringing down the Malaysian currency, the ringgit. The speech, delivered on the eve of the World Bank/IMF annual meeting, was the latest in the escalating, public row between the two men, beginning with Mahathir's charge that the "moron" speculator Soros had orchestrated a run on the ringgit. Given their respective jobs, some friction between the prime minister and the financier was to be expected. Soros's hedge fund deals in currencies, and Mahathir's country has suffered from having its currency attacked. But it was in France that Soros got into trouble with the authorities. In 1988, he was asked to join a takeover attempt of a French bank. He declined, but he did buy the bank's stock. In 2002, a French court ruled that was insider trading. Soros denies any wrongdoing and says news of the takeover was public knowledge. Nevertheless, he was fined more than $2 million; roughly the amount French authorities say he made from the trades. 3. Philanthropy Network When trying to navigate through the myriad foundations and organizations supported by Soros, it's quite easy to get lost. At present, the keyword which all of them have in common is open society (a concept to be discussed in detail in section (5) (iii)). The conceptual framework by which Soros operates his open society activities is the following: "The concept of [the] open society is based on the recognition that people act on imperfect knowledge and nobody is in possession of the ultimate truth."(see also George Soros “The Open Society Reconsidered”). Officially, the bulk of Soros' activities are centered around education, libraries, publishing, and media. Various scholarships are offered to students in order to give them, in theory, access to resources. Similarly, Soros sponsors various cultural activities in order to bring resources to people. In Albania, for example, the Soros Foundation organized an exhibition of paintings in 1992 which, according to Eduard Muka, an artist and assistant-professor in the visual arts department of the academy of visual arts in Tirana, "was the only known medium at the time". Soros' activities haven't been limited to supporting educational mobility and exhibitions, but has also been involved in the creation of educational and media facilities. Perhaps the most well-known of these is the Central European University (CEU), an accredited, 4 degree-granting educational

Load more